Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Thomas Filandro - SIG-Susquehanna Financial Group.
Thomas Filandro - SIG-Susquehanna Financial Group
Chuck with your comments you made some comments on the sourcing side but you also made some comments on rising costs or upward pressure on costs. Can you help us understand how we should view [IMU] for the balance of this year and into 2009?
Charles K. Crovitz
The forces I described, that we’ve got some things going up and some things coming down, I think our expectations at this point is that it will probably be slightly down going through the back half of this year.
Susan Riley
And that will be mitigated we expect by lower markdowns year-on-year as Chuck mentioned because we’re not doing to repeat the same promotions that we had last year.
Thomas Filandro - SIG-Susquehanna Financial Group
Another specialty retailer, a competitor of yours, talked about moms spending less, UPTs were a little bit of a drag, and they actually commented in terms of marketing they would market more aggressively earlier this year. And we do have five fewer days between Thanksgiving and Christmas. Just given your lower promotional cadence, is there any change in getting the overall value message more perceived out there in-store so you don’t lose market share in a less promotional environment?
Charles K. Crovitz
I think what it is is we’re just probably not going to have to go as deep. Last year as you know we had a lot of inventory that forced a higher level of markdowns. I think it’s that that we’re not going to repeat. In terms of the normal level of promotions or marketing that we would have driven the business with long term I don’t see any big changes in that.
Susan Riley
I think our marketers actually did something really smart, which is they curtailed the mailing of the Fall 1 magalog because you have Fall 1 set when summer’s still no sale in the stores and then they’re increasing the marketing focus on Fall 2. So again you have more magalogs out there when you have more full-priced selling.
Charles K. Crovitz
The other thing that’s going on in the marketing side is we’re trying to find ways to deliver our marketing more efficiently and one of them is what Sue just mentioned - adjusting the timing. Another way is just to shift how we deliver the marketing in terms of say direct mail versus email and making small shifts in those areas in a way that we don’t’ think will affect sales in response but will lower the cost.
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